Francophone Africa on the Rise

Posted On Monday, 15 June 2015 13:09 Published by
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According to Instinctif Partners’ Africa Insight, the better part of a decade the narrative of ‘Africa Rising’ has become something of a buzzword in and around investment circles.

The phrase refers to the fact that Africa currently hosts four of the top 10 fastest growing economies in the world today. Africa it would seem is the new kid on the block, where possibilities and potential abound. At closer inspection though, one finds that this optimism is usually in reference to English speaking African states, leaving the majority of Francophone Africa, which makes up 57% of African states, out of the conversation.

With Nigeria and South Africa firmly positioned as the continent’s economic power houses, followed by a rapidly growing East Africa, lead notably by Kenya, Anglophone Africa has clearly distanced itself perceptually from the pack. Historically, Francophone Africa appears to have lagged behind in its wake, left to scramble for relevance, as day on day news wires report on the impressive potential of its English counterparts.   

Today however, the situation has changed.  The reality is that two of the four countries vaunted as fastest growing are Francophone: the DRC and Cote d’Ivoire.  What is more, Francophone African states have made some important strides towards positioning themselves as the continent’s next growth frontiers. Over the last five years we have seen impressive real averaged GPD growth of over 6% in the West African Economic and Monetary Union (WAEMU) and 5% growth in the Central African Economic and Monetary Community (CEMAC).

This growth is indicative of the changing investment environment and shifting mind-set of policy makers. Once considered as enclaves of political instability and economic stagnation, Francophone Africa has stepped up its game in a big way.

A no-go area for investors...

French Africa, as it is sometimes called, has for decades been shrouded in mystery and ‘unknowns’. This has worked to scare off investors, fuel demeaning stereotypes, halt progress and has perpetuated a cycle of poverty and exploitation. For the most part, little attempt has been made to demystify French Africa. In fact, one could argue that there has been a deliberate effort to depict all 31 countries as a single entity, devoid of any distinguishing characteristics. This could not be further from the truth.

Francophone governments have for the most part contributed to these misperceptions.  Policy makers had been slow to adapt to the times, playing cold war games in a globalised era. Added to this is the peculiar paternalistic relationship that developed post-independence with their former colonial powers, France and Belgium. Certainly in those countries formerly ruled by France, it appeared that only French companies had been able to penetrate these markets, fuelling the widely held belief, that “there is a French company behind every palm tree”. 

According to a report by Ernst & Young, What it takes to succeed in Francophone Africa, most English speaking investors have been reluctant to invest in Francophone Africa due to fears around the unique business culture, language barrier and crippling bureaucratic red tape. 

Changing business and policy environment

With the effects of globalisation and a refocus on emerging markets, Francophone Africa has gradually begun to show signs of its own economic potential. Today, we see more and more firms venturing into the region, lured by its natural resources, virgin markets and growth potential. Australian companies, for instance, are investing greatly in mining, whilst companies from the Middle East and Asia are putting money into the agricultural sector. Added to this, other African companies are also venturing into Francophone Africa with Nigeria’s Dangote Group for example, expanding into Senegal, Gabon and the Republic of the Congo, and South African firms exploring the banking, retail and telecom space.  

Financial sector

The financial sector in Francophone Africa has traditionally been dominated by three main groupings. The French, exemplified by Societe General, BNP Paribas and BPCE; The Moroccans, consisting of Attijariwafa Bank, Bank of Africa and BCP; and lastly Sub-Saharan Africa, represented by the likes of Ecobank, Orabank and BGFI. These three groupings make up the financial backbone of Francophone Africa. 

French banks had in the past dominated the sector, having both strong cultural-historical and institutional linkages to their host countries. However after the 2008 economic crisis and the prudent measures placed upon them thereafter, French banks were forced to institute risk mitigation policies that impacted their ability to invest in new growth segments such as the growing SME sectors in Africa.

South Africa’s Standard Bank for one, has made clear its intentions to expand into Francophone Africa. In 2014 it announced the opening of its Abidjan office which it said will serve as its launchpad into the rest of the region. With the discovery of oil, natural gas and other commodities, more and more banks are looking to Francophone Africa as an investment destination. Citigroup Inc., Standard Chartered Plc and Barclays Africa Group Ltd have also stated their intentions to increase their presence in the region. 

Capitalising on the next frontier

Growth in Francophone Africa is not only driven by traditional sectors such as oil and minerals, but increasingly, agriculture and services too.   Adventurous and culturally informed investors, who partner with the right advisors, are already seeing returns from their forays into this diverse and rewarding region.

As we move towards 2016, it will be interesting to see the lengths policy makers will go to encourage new investments in the region and fund much needed infrastructure projects in their respective states.  The DRC for one has already gone on a charm offensive, with financing rounds for its ambitious hydropower project, the Grand Inga Project set to close later this year. The Cote d'Ivoire, with its projected 9% growth rate, has also been doing the funding rounds, looking to attract business back into Abidjan following a sustained period of peace and stability.

While there are still challenges intrinsic to investments in all African markets, French Africa is undoubtedly the next frontier. Not only does it offer new markets and astronomical growth opportunities, but governments are actively working to create a more conducive policy environment and frameworks for investment. That said Francophone countries will still have their work cut out for them, having to appease concerns around corruption, political instability, ease of doing business and growing fears around Islamic radicalism. If done correctly though, Francophone Africa can see its fortunes rapidly change for the better.  


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